Who's mining Bitcoins?

[R3DP3NGUIN]

Whats happening TechSpot peeps.

I'm curious to know if many people here are into Bitcoin mining. If so, what rigs you got, and if you have actually manged to make some coin.

 

[Kunming]

I'm setting it up ^^.
It's really a fascinating thing.

For the uninitiated: https://www.weusecoins.com/
A link to a video and site, that explains Bitcoin.

 

[St1ckM4n]

Is it pretty much giving you 'credit' for helping to decrypt some passwords and stuff?

 

[bobcat]

An interesting subject. I've always had the impression that you do a lot of work for little reward. Is this so? And where does the money come from?

 

[Kunming]

Bitcoins are really interesting guys.

You do get a kind of reward for solving cryptographic blocks, using
your computers hardware. Naturally this lends itself to the fact that if you
have a good computer, you'll be able to do this solving whole lot faster.
So yes, you yourself don't have to do much per say, except install a few
programs (Your Bitcoin wallet and a GUI "miner" program). While mining, you
won't be able to engage much in things like gaming, if it's a demanding game.
But you can leave your computer running over night for example.

Bitcoins are really cool because you can buy REAL things with them. You can also
convert them back into real cash. Many sites already do accept Bitcoins, such as
Amazon.

 

[davislane1]

An interesting subject. I've always had the impression that you do a lot of work for little reward. Is this so? And where does the money come from?

According to the research I've done, it's a matter of profit margin. The "mining" process eats up power and requires higher-end hardware (so, minor electricity costs and $800-$1200+ for an appropriate rig), which translates to a significant amount of any bitcoin profits going to cover basic operating and equipment costs. Moreover, unless you have a properly setup rig, any bitcoins you receive probably won't even cover the cost of keeping the computer on.

As for where the money comes from... Apparently, they can be exchanged for currency on applicable exchanges or used to purchase goods from retailers that accept the virtual currency. Effectively, it works like any other commodity: you have something of relative scarcity, the market decides what it's worth, and you can sell or purchase it at that price, or trade it for something of equivalent value.

Feel free to correct me if my understanding of bitcoins is faulty.

 

[Kunming]

According to the research I've done, it's a matter of profit margin. The "mining" process eats up power and requires higher-end hardware (so, minor electricity costs and $800-$1200+ for an appropriate rig), which translates to a significant amount of any bitcoin profits going to cover basic operating and equipment costs. Moreover, unless you have a properly setup rig, any bitcoins you receive probably won't even cover the cost of keeping the computer on.

As for where the money comes from... Apparently, they can be exchanged for currency on applicable exchanges or used to purchase goods from retailers that accept the virtual currency. Effectively, it works like any other commodity: you have something of relative scarcity, the market decides what it's worth, and you can sell or purchase it at that price, or trade it for something of equivalent value.

Feel free to correct me if my understanding of bitcoins is faulty.

I'd say anyone can engage in the mining. So it's not because you need a high end rig. The thing is, that
you'll be able to mine faster, with a good rig. There's even specific graphics card used for mining, because they're
especially good and graphics cards are superior in terms of how fast you can mine. However my memory is
vague so I can't produce any names. It was something a friend showed me.

Bitcoins are interesting as an experiment, as they're more safe than normal currency, in various ways.

 

[davislane1]

I'd say anyone can engage in the mining. So it's not because you need a high end rig. The thing is, that
you'll be able to mine faster, with a good rig. There's even specific graphics card used for mining, because they're
especially good and graphics cards are superior in terms of how fast you can mine.

This is why I say that you need an appropriate rig. If your computer isn't up to proper spec, the process of mining is financially pointless. For instance, a rough equation for estimating revenues might look like this (BV = Bitcoin Value):

(BV x Units)(Frequency) - (Rig Cost + Electricity Cost) = Profit

Even if you don't build a new machine (thus eliminating rig costs), the frequency at which you generate bitcoins will likely be so low relative to units that you won't be able to cover the electricity expense.

Although you might collect a fraction of a bitcoin (or even a full bitcoin) from time to time on an ordinary machine, the electricity costs of running the computer will completely outstrip anything you're likely to make (statistically speaking) from engaging in mining. Allegedly, GPU mining was implemented (in part) to solve this problem. However, cards that will give you a reasonable boost in mining "output" are going to run several hundred dollars or more, bringing us right back to square one.

 

[Ranger12]

I spent some time trying to wrap my head around how bitcoins work. I haven't been very successful but it is very interesting. I am interested in trying just to get a better understanding of it. There doesn't seem to be any risk involved (hence the low return). It also makes me wonder whether there is a market for hardware designed specifically for a task like bit coin mining.

 

[davislane1]

I spent some time trying to wrap my head around how bitcoins work. I haven't been very successful but it is very interesting. I am interested in trying just to get a better understanding of it. There doesn't seem to be any risk involved (hence the low return). It also makes me wonder whether there is a market for hardware designed specifically for a task like bit coin mining.

Hardware: http://www.butterflylabs.com/

Risk: Changes in bitcoin value. There is a theoretical limit to the number of total bitcoins that will be generated (something like 21 million or so), but the real value of those coins is subject to change as a result of supply and demand.

 

[Ranger12]

Also something that I find even more interesting would be bit coin speculation. Just like with any other currency exchange speculation would possible. Say I believe the exchange rate for bit coins to dollars will increase, I would buy up bit coins then sit on them until the exchange rate went up then exchange them at the new rate. Obviously, it's very risky but the reward is also greater, assuming you speculate right

 

[cliffordcooley]

You may want to read this article. If you can not afford to use top of the line equipment, you are better off not bitcoin mining.

A Guide to Bitcoin Mining: Why Someone Bought a $1,500 Bitcoin Miner on eBay for $20,600

 

[davislane1]

You may want to read this article. If you can not afford to use top of the line equipment, you are better off not bitcoin mining.

A Guide to Bitcoin Mining: Why Someone Bought a $1,500 Bitcoin Miner on eBay for $20,600

Great article. I see I was a little bit off in my analysis, but the general idea was right: it's simply not worth while unless you're willing to lay down some serious coin upfront (no pun intended).

 

[Kunming]

Also something that I find even more interesting would be bit coin speculation. Just like with any other currency exchange speculation would possible. Say I believe the exchange rate for bit coins to dollars will increase, I would buy up bit coins then sit on them until the exchange rate went up then exchange them at the new rate. Obviously, it's very risky but the reward is also greater, assuming you speculate right

Doing such a thing would be very very risky I think, because Bitcoin isn't so
stable. Sudden fluctuations do happen. But hey if you want to store your Bitcoins,
the best way to do that, ironically, is to print them out on at least 2 pieces of paper
and store them at safe places.

 

[St1ckM4n]

Yeah, but is this just a pure exchange of coins for your time? I'm sure that whoever distributes the actual bitcoins gets something out of this (apart from a cut).

 

[bobcat]

Much has been clarified as regards what is involved and what gains, if any, can be expected.

But my second question above remains unanswered. Namely, where does the generated bitcoin money come from? In other words, who pays for it and why would anybody stand to gain from you using your computer for mining so that he'll pay for it?

 

[cliffordcooley]

My guess would be it's a form of digital stock market. Which is why the value(basically your computers performance) of a Bitcoin changes. People who invest and actually pay for Bitcoins is where I see real value assignment. I too am curious as to who actually invest in this project, whether it be an investment or otherwise.

As an investment

Although it is considered a digital currency, virtual currency, or "payment scheme", it is often traded as an investment and accused of being a form of investment fraud known as a Ponzi scheme. On this subject, a report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.

In contrast, The Bitcoin Project describes bitcoin exclusively as an "experimental digital currency." and does not refer to it as an investment. Reuben Grinberg has claimed some of bitcoin's supporters have argued that bitcoin is neither a security nor an investment because it fails to meet the criteria for either category.

 

[Ranger12]

I was talking to a friend about his experience with bit coins. Turns out he knew a couple people who use bit coins to purchase drugs.
http://www.forbes.com/sites/andygre...ng-22-million-in-annual-mostly-illegal-sales/
It seems the secure and largely anonymous nature of bit coins makes it an attractive means of payment.
As for why bit coins have value. The market assigns value to any given currency. The market being made up of buyers and sellers. If you think of Fallout where the currency is bottle caps you can see that something that is traditionally worthless now has value because buyers and sellers assign value to it because it facilitates the flow of goods.
As far as I can tell bitcoins are just being created each day. What keeps inflation of bitcoins down is that the market volume increases as well as the difficulty of mining new coins.

 

[Burty117]

I've just started mining bitcoins! however, it isn't going so well

 

[captaincranky]

I've just started mining bitcoins! however, it isn't going so well

And you thought it was supposed to....um.............er......, exactly why then...?

 

[Burty117]

And you thought it was supposed to....um.............er......, exactly why then...?

Well I was hoping having a fairly decent rig (Intel 4770K, 8GB RAM, Nvidia GTX 780) I could mine some coins to spend, set it all up and I'm just hitting 292 Mhash/s which from what I can see is very low a single ATI card such as the 7970GHz edition on its own beats my score by almost quadruple, unless I'm doing something wrong?

 

[captaincranky]

Here's some basic math, "C" minus "Z" equals "C"!

Where "C" equals cost of computer, and "Z" equals value of Bitcoins mined...

Actually the answer is "equals" "C +E". Where "E" equals the electric bill.

Yeah, yeah, yeah, I know I'm dense. Nobody has, thus far, been able to satisfactorily explain why Bitcoins should have value.

I'll worry more about it when the government tries to pay my pension checks with them. Until then........meh.

 

[Raoul Duke]

Not interested. I think that for those who are, it is already too late for an individual with a rig to make his money back on the rig much less make a profit

 

[GhostRyder]

Well I was hoping having a fairly decent rig (Intel 4770K, 8GB RAM, Nvidia GTX 780) I could mine some coins to spend, set it all up and I'm just hitting 292 Mhash/s which from what I can see is very low a single ATI card such as the 7970GHz edition on its own beats my score by almost quadruple, unless I'm doing something wrong?

Well AMD cards tend to be better at mining, however you probably don't have the correct setup on yours. There are different numbers and rates that will probably double or triple your rates if you check along with better software's including things like Cuda miner.

 

[captaincranky]

Not interested. I think that for those who are, it is already too late for an individual with a rig to make his money back on the rig much less make a profit

This is where the adage, "nothing ventured, nothing gained", rears its ugly head, and comes into play.

Speaking from experience, pornography can be "mined", using the most basic of IGP graphics.

Since I'm far too cheap, and far too lazy, to spring for an extravagant, high powered video card, then go through the trouble of installing it, I guess I'll always be, "porn rich, and Bitcoin poor".........